In a recent post on the millicast.com blog, we spoke about the value of Media Streaming and the corresponding business models. We think that question if of interest to a larger audience, and that some points can actually be better addressed. So we’re doubling down with a more focussed post here.

Those who attended the Streaming Media West conference in late 2018 had the opportunity to see Netflix presenting the very pragmatic rationale behind all of their bandwidth optimizations: cost reduction, but first and foremost, increase in customer satisfaction!

As far as the costs are concerned, the operating costs of a on-demand or even live platform is largely dominated by the bandwidth usage. Then comes the instances cost itself. At a time where everybody was using the same codec (H.264), the same Content would use the same amount of bandwidth independently of the service, and translating prices into GB would make different services cost much easier to compute and compare. Since you could not differentiate your operational costs on bandwidth, the only option would be to differentiate on instance pricing, creating a race to the bottom.

However, with the very public legal debacle of H265, and the rise of royalty-free open source codecs (VP8, VP9), and now the Alliance for Open Media’s AV1, things have changed. In the past 5 years, Netflix (and all others) have moved to VP9 then now AV1.

We believe Netflix moving so fast through codecs is a perfect example to follow for Real Time Streaming.

Obviously, every bit you can squeeze out of popular movies being streamed multiple times a day, equates to direct cost savings.

Understandingly, most people focus on the coding efficiency parameters of codecs, i.e. how much better they are at compressing a video of a certain resolution (say 1080p@60). This is of course interesting for the platform operator, but for Netflix, and many others, that comes second to customer satisfaction. Customers who pay a membership to platforms, also have to pay their ISP to consume the content on mobile, the preferred platform of streaming. Most of the time, end consumers have a fixed monthly data plan. In the US for example the median is 4GB per month. Platform owners challenge is then: how many hours of full HD movies can I stream with 4GB?

If, as a platform owner, you choose your cloud service solely depending on the cost per GB, you are only reducing your operating cost. If you choose depending on cost per title, or cost per minute of Full HD video, (of which codec is a good proxy), you will not only reduce your cost but also improve your customer satisfaction!

As recent as this month, in the context of the discussion about AV2 design and testing within AOMedia, it was proposed by many to replace the quality metric from an objective metric (that a computer understands), to a subjective metric (which correlates with what consumers feel). The best metric right now for that is Netflix’s own WMAF, or CoSMo’s real-time equivalent NARVAL. That shows a change of direction from a math/tech heavy codec development ecosystem, to a more pragmatic, human-consumer-centered process. It was not long before the Google engineer added the corresponding feature to the official liboam for AV1, and showed 30–40% better coding efficiency from the same encoder a few months before. Yes, 30–40%!

Today there are only three companies that have a WebRTC implementation with AV1: Google, Cisco and CoSMo, and only one with a streaming platform that leverages it: Millicast.

If you’re looking for a streaming solution, want to not only reduce your operational cost, but also empower your customers, talk to us.

Post Scriptum: If you see a vendor comparing prices per-GB, run.